Inventory turned over seven times during the year at Rockdale Electronics. Similar electronics retailers have an inventory turnover equal to twelve times per year. Which of the following best explains the state of Rockdale's inventory management?
A)The company sold too much inventory during the year.
B)The company needs to increase sales and decrease the amount of inventory on hand.
C)The company is performing much better than its competitors.
D)The company should increase the amount of goods on hand to accommodate the growth in inventory demand.

Question

Quizplus · Accepted Answer

Rockdale Electronics has a lower inventory turnover compared to its competitors, indicating that it may have excess inventory. To improve inventory management, the company should aim to increase sales and decrease the amount of inventory on hand.

Inventory Turned Over Seven Times During the Year at Rockdale